Financial markets are now fully pricing in two Reserve Bank of New Zealand rate hikes by September, driven largely by global economic pressures rather than domestic developments. The shift in expectations comes as weaker risk sentiment globally puts upward pressure on New Zealand interest rates, despite no significant new local economic data.

The catalyst for this repricing appears to be rising US inflation, with April's Consumer Price Index data coming in higher than expected and pushing US Treasury yields upward. This global force is flowing through to New Zealand's rate expectations, with oil prices also climbing amid ongoing geopolitical tensions in the Middle East, though no fresh developments have emerged from that region.

The market's pricing suggests investors expect the RBNZ to move more aggressively than previously anticipated, reflecting concerns that global inflationary pressures and higher international borrowing costs will necessitate a stronger domestic monetary policy response to maintain price stability.